McDonald’s Set to Report Q4 Earnings Amidst Market Challenges
Analysts Expect Slight Drop in Profit as Company Faces Increased Pressure
McDonald’s Corporation (MCD), based in Chicago, Illinois, operates the world’s largest fast-food chain. With a market capitalization of $207.3 billion, the company serves various food products and beverages across over 40,000 locations in more than 100 countries. Notably, about 95% of these restaurants are run by independent local franchisees. The fast-food leader is expected to reveal its fiscal fourth-quarter earnings for 2024 on Monday, February 10.
Analysts project that MCD will announce a profit of $2.85 per share on a diluted basis, marking a 3.4% decrease from $2.95 per share reported in the same quarter last year. Over the past four quarters, the company has outperformed consensus expectations twice while falling short on two other occasions.
For the full fiscal year, projections indicate an earnings per share (EPS) of $11.75, which is a slight decline of 1.6% from $11.94 in fiscal 2023. Nonetheless, EPS is anticipated to rebound with a 6.3% increase to $12.49 in fiscal 2025.
Over the past 52 weeks, MCD stock has underperformed compared to the S&P 500’s ($SPX) 24.2% gains, declining 1.7% during the same period. The stock also lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 27% rise.
MCD’s struggles stem from disappointing growth and weak earnings performance. Increased cost pressures have affected operating margins, leading to a decline in comparable sales in international markets, indicative of reduced demand. The company contends with a competitive landscape where consumers increasingly prefer healthier food options. Furthermore, concerns exist regarding weaker performance in significant international markets such as the Middle East and China.
On October 29, MCD shares saw a slight decline after releasing its Q3 results. The adjusted EPS of $3.23 surpassed Wall Street expectations of $3.18, while revenue of $6.9 billion also exceeded projections of $6.8 billion.
Currently, analysts maintain a moderately bullish stance on MCD stock, reflected in a “Moderate Buy” rating overall. Of the 34 analysts monitoring MCD, 18 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and 14 advocate a “Hold.” The average price target for MCD stands at $324.03, suggesting a potential upside of 12.9% from current levels.
On the date of publication, Neha Panjwani did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article are intended solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
